"Much like the surge last April, we think this is due to another one-off event," UBS analyst Hubert Tang said. "It appears the impact of Beijing Olympic Games on the economy is felt far earlier than the spectacular opening ceremony." Domestic steel demand in China has been declining after the government ordered the shutdown of construction sites in Beijing to improve air quality.
Luo Bingsheng, vice chairman of the China Iron and Steel Association, warned recently that China may take further measures to restrain outbound trade in the second half if exports bounce back too much.
The industry group has aimed to reduce China's steel-product exports by 20 million tons this year.
Some analysts said the Customs may have confused the date for delivery and that of payment while compiling statistics, therefore leading to the sharp rise in July's data.
"From June to July, there's no significant change in international market demand, the price gap between home and abroad remained stable, and there were no policy changes for steel exports," Orient Securities analyst Yang Baofeng said. "So there's no special reason that differences for data in two neighboring months could be such big."
The Customs couldn't be reached for comment.
Haitong Securities analyst Liu Yanqi echoed Yang's view, saying the average of June's and July's export data may tell a clearer picture.
The average export price for steel products from January to May was US$844, US$889, US$885, US$928 and US$983 per ton, respectively, Liu wrote in a report. But that's US$1,041 for June and US$813 for July.
"The average of June and July was US$909 a ton, which was more close to the actual situation," Liu said. "The government won't rashly move to curb steel-product exports as this may affect the whole export picture at a time the economy is not that good."
Still, Liu said June and July exports accounted for 14 percent of the nation's total output, which was still a bit too high.
Industry officials have said to export a 10th of China's production is a reasonable and healthy level.
(Shanghai Daily August 14, 2008)
